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How Thomas McInerney's Guba beat out the bigs in the race to offer legal movie downloads.

Thomas McInerney

CEO and CoFounder, Guba
San Francisco, California

McInerney, 34, wooed Warner Bros. for a year before winning the right to be the first independent company offering legal downloads of theatrical movies. Here, from his Los Angeles apartment, he explains how an upstart can outmaneuver rivals when trying to make a deal with a cautious giant.

"About a year ago, while having lunch with a friend, I got the sense that the movie studios were ready to put content online if it was the right experience. I altered the course of my company on a bet that they would be willing to meet. I rented an apartment in L.A. and started knocking on doors.

The film business is very relationship-oriented, which is different from Silicon Valley. We hired a former general counsel of Paramount to help us. He would explain the realpolitik. And we began a dialogue with Warner Bros. We came in with humility and with the perspective that we wanted to build a relationship. The initial offering would not necessarily be the killer app, but rather we'd work toward a buying experience that's competitive with the DVD and then eventually eclipse it. It took many, many months, letting them get to know us.

We knew Warner was dealing with a number of potential online distributors, so the chemistry had to be right. We educated ourselves about the movie business. And we took Warner's concerns—channel conflicts with retail partners, piracy, digital-rights management—seriously. I'd like to see DRM relaxed more and worry about offering movies at the right price and in the right way. But we had to reach some common ground to get things going.

Once we finalized the deal, I just cried. It was the culmination of so much work. Now Amazon and Apple have entered the market. We expected those guys to get here eventually. It was important for us to be first because we've had a few months to experiment. We now have all this data about what works and have built up even more trust with our studio partners. Our number-one advantage is agility."

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